Sunday, February 21, 2010

The conservative talking point of labor laws and environmental regulations "kill jobs". This has always struck me as an oversimplification, but until recently I'd never given much thought to exactly how it might be right or wrong.

Well, I found this blog post about minimum wage laws by "The Drage"... and I think I get it now. His argument against them is basically that employees should be able to charge as little as they want for their labor, and that establishing or raising the minimum wage increases unemployment by making employers pay more for the same labor. Emphasis mine:

"How long do you think the company will keep [its workers] employed [following a minimum wage increase] if they're not worth what they're being paid? Well, if they don't perform to their new standard then chances are they will be let go and the company will go find employees who are worth the $7.25 an hour that they are forced to pay. Furthermore, the company's total labor costs will increase. Is it likely that the company will be able to raise prices enough to offset the increase in wages in this economy? Probably not. Therefore, the company will have to find some way to cut costs and the first place they'll likely look is payroll."

Great Scott, I do believe I've found the problem.

The employer in this example didn't have to cut payroll expenses first; they just thought everything else was more important. Regulations like minimum wage don't "kill jobs" per se , but they appear to have that effect because most employers prioritize exactly like the hypothetical company in this example.

Outsourcing is caused by the same thing. American companies probably could operate in the United States and still make a profit. But they can make even more by going to countries where there's no minimum wage, and whose regulations (or lack thereof) make our laws look positively Draconian. The conditions that come about from this lack of standards are ones that most Americans would never tolerate - to even begin to compete, we'd have to go much further that eliminating the minimum wage. We'd have to get rid of every single regulation from OSHA down to child labor laws, and we'd have to allow conditions like the picture on the right - all for the sake of being competitive. Until our standards are the absolute lowest in the world, businesses will still complain that they're too much of a burden... and the problem is always with the standards, and never with those who refuse to meet them them. We're presented with a choice: labor laws and clean air, or outsourcing and unemployment. You don't have to look too hard to find evidence that this is a false dichotomy.

Ray Anderson describes himself as "profit-minded as anyone", but his carpet company has gone far beyond "compliance" with environmental regulations. He's made it their mission to manufacture carpets in the most sustainable way possible, and someday he wants their manufacturing process to be completely sustainable and waste-free. Likewise, the restaurant chain In-N-Out Burger is still very successful in spite of exceeding the minimum requirements of California labor laws. Even their part-time workers get at least $2 above minimum wage and paid vacation, and full-time employees get very generous health insurance benefits and a 401(k) plan. Both of these companies might be able to make a greater profit if they operated the way most companies do, but they've placed a priority on making their profits responsibly.

Other companies could do this, but it's less costly not to. Every time we try to make them they will complain that we're asking too much. They will always fail to notice the Ray Andersons and In-N-Out Burgers of the world, because otherwise their false dichotomy of profit and ethical behavior might be recognized for what it is.